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EPTE Newsletter: Samsung - A Copy & Paste Company?

Samsung Electronics, the flagship company of the Samsung Group in Korea, continues to enjoy success in the global electronics market. The company has reached the number one position for many electronics products, including semiconductors and mobile devices. Samsung's Galaxy Series (tablet PC and smart phone) is gobbling up market share from competitors. The future looks bright for Samsung.South Korea is one of the most industrially advanced nations thanks, in part, to Samsung. The company has a powerful influence on the country's economic development, and contributes much to the Korean economy.

If are so rosy for Samsung, why do mid-level managers feel inferior to their peers from Japan and the U.S.? The industrial advances in Korea over the last 20 years are incredible and Samsung has been the largest part of the country’s success. However, Samsung engineers are not proud of their great progress, because most of the technologies were imported from Japan and the U.S. (sometimes illegally). One of my Korean business associates is a retired research engineer and spoke in a self-deprecating manner that Korea is a “copy and paste technology” country. Korean companies will buy the minimum order for state-of-the-art equipment from Japanese companies and conduct a detailed tear-down analysis. From this reverse research and development, they build their own equipment with minor modifications. There is no innovative idea in the new machines...the only difference is a much lower cost.

The executive teams from Samsung Electronics recognize the lack of innovation from their engineering staff and are encouraging their R&D departments to generate new ideas. Unfortunately, nothing new has come from them in the last several years. An R&D director from Samsung told me that he has more than 50 engineers with Ph.D.s from universities in Japan and the U.S., but none of them can come up with any creative ideas.From the engineers view, one R&D manager grumbled that his department forwards many proposals to the executive managing teams, but none are ever accepted. The executive teams ask for accurate forecasts from potential products or ideas, but the R&D teams cannot accurately forecast the potential for a product that is not on the market. 

Another variable playing into the economic equation for Korea is the value of its currency. The Korean won appreciation against the Japanese yen placing a pricing pressure on its products compared to prices from their Chinese competitors. The Korean economy can be compared with a wildfire in western California--once a small fire is put out, more fires continue to pop up; all there is time to do is put out fires.   

Samsung still has power and money. I think the company should remove the “copy and paste” model from its business culture and trust its employees to come up with new ideas. Innovation will carry Samsung for the foreseeable future.

Dominique K. Numakura, dnumakura@dknresearch.com DKN Research, www.dknresearchllc.com

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Headlines of the Week

(Contact haverhill@dknreseach.com for further information on the news.)1. Hitachi Chemical (Major electronic material supplier in Japan) 6/26The supplier has commercialized a wave length conversion powder that changes UV rays to visible light for photovoltaic cells.2. Hitachi (Major electric and electronics company in Japan) 6/26The company has developed a new double-sided liquid cooling module for power devices such as SiC and GaN. It doubles the power capacity of the package.3. AIST (R&D organization in Japan) 6/26The organization has developed a new welding process for packaging MEMS devices. The process can be conducted at room temperature and by using one ATM ultra flat surface.4. Mitsubishi Material (Major material supplier in Japan) 6/30The supplier has organized a new division in the U.S. to recycle electronics scraps to collect precious metals.5. DENSO (Major car module manufacturer in Japan) 7/1The manufacturer will invest $35.8 million to expand the manufacturing capacity of transmission modules in Mexico to cover the growing market in north America.6. AIST (R&D organization in Japan) 7/7The organization has developed a next-generation photovoltaic cell with multiple conjunctions. It combines GaAs and other materials including CIGS and Si.7. TANAKA (Specialty metal material supplier in Japan) 7/8The supplier has developed a new screen-printable silver ink paste curable by UV irradiation. It can generate fine lines down to 70 microns.8. FDK (Major device manufacturer in Japan) 7/8The manufacturer has commercialized a new SMT-type high power inductor, “MCP Series 2016D,” for mobile products.9. Toshiba (Major electric and electronics company in Japan) 7/9The company has unveiled a new sticky sheet type wearable sensor module, “Silmee Bar type." The measured data can be sent directly to a smart phone or tablet PC.

10. Alps Electric (Major device manufacturer in Japan) 7/8The manufacturer has unveiled the industry's thinnest connector (SCGH1B Series, 0.69 mm high) for micro SD memory cards (PCB cut-off type).

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